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Silicom Ltd. Message Board

  • fish.andchips fish.andchips Sep 27, 2013 1:37 PM Flag

    Silicom analysis –Part 1-the analysts

    As I can only find information on 2 analysts, Ken Nagy at Zacks and someone at Maxim, I will focus my comments on these 2.

    Ken Nagy has been very conservative in his outlook over the last couple of years, but has gotten a little better in 2013. His revenue and earning forecasts were always a quarter or 2 out of sync and his estimates for operating expenses expanded faster than revenue. In his last report on July 26th after the conference call, he’s corrected that by lowering the expense ratios and thus, increased earnings without increasing his revenue estimate. His estimated revenue number for 2013 is $65.2 M, which is 34% higher than 2012 revenue of $48.7M. His estimated revenue number for 2014 is $75.0 M, which is only 15% over the 2013 revenue estimate which again is a very conservative number based on what sales have been and with all of the new technology just starting to ship.

    He provides a very good analysis of their business, their technology and the growth potential, but just doesn’t back it up with estimates for next year. Based on his numbers for 2014, $75M in revenue and $2.08 in earnings and his target is $50/share; Silicom’s PE would be 24.

    Maxim initiated coverage back in March on Silicom with a buy rating and Silicom beat their Q1 and Q 2 estimates by 21% and 20% respectively. They awarded Silicom with a downgrade (4 months after issuing the buy) the day after Silicom announced their Q 2 numbers. As I have never seen any reports or information on the reasoning behind the downgrade, I can only wonder why.

    If anyone on the board has any information on the analysis or the downgrade done by Maxim back in July, I would love see it.

    F&C

    Sentiment: Strong Buy

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